August 7 – Corn Prices Move Higher Ahead of USDA Crop Progress Report

While the WASDE report looms larger for the week of August 7, markets today reacted to reports that drought conditions have worsened in North Dakota and other areas of the Northern Plains. Severe drought is also hitting portions of Iowa, according to the US Drought Monitor.

Last Thursday’s drought report indicated that 62% of North Dakota, 52% of South Dakota and 40% of Montana are in a severe, extreme or exceptional drought.

The U.S.D.A. also released its weekly crop progress report at 3 pm CST.

Markets are not expecting too much rain this week. The National Weather Service said that small showers won’t really hit the region until Wednesday, but even then, it’s questionable if they will have any major impact on the crop. With the deadline approaching tomorrow for the weekly data collection, markets are expecting worsening conditions.

Futures prices for corn, wheat, and soybeans all showed modest gains Monday. Here’s our daily recap of grain prices at the Chicago Board of Trade for August 7, 2017.

Corn Prices Tick Higher

September corn prices added 3.5 cents to finish the day at $3.70, Meanwhile, new-crop December corn futures contracts added 3.5 cents to close just above $3.84. Prices were moving higher ahead of this Thursday’s WASDE report. Analysts anticipate that U.S. agency will cut yield expectations and offer a lower production target.

Ahead of the report, Bloomberg conducted a poll of analysts. The average expectation for total U.S. corn production is pegged at 13.81 billion bushels. The average yield figure sits at 165.9 bushels per acre. The production figure is down from the July estimate of 14.255 billion bushels.

This afternoon, the USDA reported that 93% of the corn crop is silking, up eight percentage points from last week. Despite the uptick, this figure is still off three points from the same period in 2016.

Of course, the big number today was the USDA’s quality figure for corn conditions. Once again, the weekly figure showed a deterioration in corn quality. The percentage of the crop rated good-to-excellent fell from 61% on July 30 to 60% on August 6. Consensus expectations had called for a slight uptick in quality, so the downturn is bullish news for the crop.

Finally, prior to the USDA’s crop progress report, the agency reported weekly export inspections for the week ending August 3. Weekly export totals hit 979,006 metric tonnes of corn. That figure is a 1.4% drop from the previous week, but a huge decline (34.33%) from the same period of 2016.

The U.S. reported that Mexico purchased 7.12 million bushels of new crop corn and said that 7.57 million bushels of new corn were headed to unknown destinations, according to Reuters.

Soybean Prices Gain on Exports

The August soybean futures contract added 7.75 cents to finish the day at $9.57. The September futures contract added 11.75 to finish at $9.64. The new-crop November futures contract added 10 cents to close at $9.665.

The uptick was supported by stronger than expected exports. The USDA said that soybean export inspections totaled 685,697 metric tonnes. That figure was nearly 40% higher than last week.

Like the expected results of corn, analysts are not expecting that the USDA will maintain yield expectations in the upcoming WASDE report. The latest Bloomberg analyst survey projects a yield of 47.4 bushels per acre on top of 4.2 billion bushels. The latter figure represents a 56.9 million bushel cut from its July forecast.

Finally, here are the numbers from this week’s crop progress report.

The USDA said that soybeans rated G-E increased from 59% on July 30 to 60% on August 6. The uptick was driven by recent rain storms. However, that 60% figure is still off from last year’s rating of 72%. In addition, crop quality the northern Plains and Kansas is underwhelming compared to historical norms. 

Wheat Prices Push Higher, Quality Improves

Wheat prices pushed higher as the Winter Wheat harvest comes to a close. The September SRW wheat contract in Chicago added 3.75 cents to close at $4.585. Markets were keeping a close eye on the weather and awaiting an update to the Drought Monitor later this week.

In Kansas City, the September HRW contract added 1.25 to close just below $4.61. Finally, the Minneapolis Spring wheat contract gained 6.5 cents to finish just under $7.23.

The USDA reported today that 94% of Winter Wheat has been harvested so far this year. That’s a six-point gain from the previous period and is in-line with last year’s progress. Meanwhile, the spring wheat harvest has clocked in at 24% across the top six states.

Last week revealed a small surprise in wheat quality. The USDA reported that G-E rated crop hit 32%, which was a one percent gain from the previous week. The crop rated excellent increased from 5% to 7% over the week.

That said, crop quality in the northern Plains has been dismal. The USDA reported that crops rated G-E in Montana and South Dakota registered at 9% and 8%, respectively.

Today’s progress report puts the WASDE report in focus. Bloomberg conducted a poll of analysts last week to determine their expectations for total production. The survey found an average 1.717 billion bushels. Spring wheat conditions were responsible for that survey estimate to show a 54-million-bushel decline from this time in July.

About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.

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